Saving Money on Prescription Drugs – Picking the right Part D plan is half the battle

Prescription drug pricing can be more than a little confusing. Drugs can also be costly, especially if you have a chronic illness. Choosing the right Medicare Part D plan, however, can save you a considerable amount of money on your prescriptions. With the Part D Annual Enrollment Period now open, it’s a good time to review your Part D elections.

Here are a few ways to save money on drugs:

Comparison shopping. The price for the same drug can vary widely from pharmacy to pharmacy. This is true whether a prescription drug is purchased for cash (without insurance) or using Part D prescription drug coverage.

For example, say you are paying cash for losartan potassium (the generic version of Cozaar, prescribed to lower blood pressure). At local pharmacies in the western suburbs of Chicago, this drug can cost anywhere from $7 for 90 tablets of the 100 mg dose to a high of almost $70 for the same dosage and number of tablets.

If you are paying cash for prescriptions you can use sites such as GoodRx to see what drugs cost at different pharmacies and make the best choice. Check drug prices frequently, as they can change on a daily basis.

Choosing the right combination of pharmacy and Medicare Part D plan. What if you are enrolled in a Medicare Part D plan? In this case, the price differential for the same drug may even be higher at different pharmacies. To know how much you will spend on drugs, you need to take into account both the specifics of your plan and the pharmacy you use. In some cases, you may discover ways to purchase the same drug for less money.

For example, if you are enrolled in a Medicare Part D plan, the monthly premium for this plan runs around $26.80, which is not out of line with most of the plans in the geographic area. Let’s also say you purchased the Part D plan based on name recognition and its relatively low monthly premium. However, neither is a good proxy for value.

You use a favorite local pharmacy that is not in the plan’s network. A drug you need, losartan, is on the plan’s formulary, but the plan will not pay for it because you are using an out-of-network pharmacy. You face paying the full cost of the drug, which was $262.40 for a three-month supply.

There are two ways out of this dilemma. You could pay cash for the drug at a different pharmacy selling the same dosage and number of tablets for just $7. You could also use the mail-order pharmacy associated with your current Part D plan. In that case, the cost of the losartan would be $0.

But you have used the same retail pharmacy for years and received personal attention. You are also nervous about using mail order.

You ask your doctor to send your prescription to the pharmacy offering to sell the three-month supply for just $7. During the next Annual Enrollment Period, though, you switch to a plan that had your preferred retail pharmacy in its network. The cost of your losartan was now $0 for a 90-day supply from that same pharmacy. You are very happy that you could still use your favorite pharmacy.

Weighing all the factors when choosing a Part D plan. As this example illustrates, you need to consider more than cost when choosing a Part D plan. Before selecting one, you should think about several questions:

Is your prescription drug(s) on the plan’s formulary? Note that in our example, the drug was on the plan’s formulary, but your favorite local pharmacy was very expensive.

Is your favorite local pharmacy in-network, a preferred pharmacy, or out-of-network? Plans may offer what’s called a preferred pharmacy, which is an in-network pharmacy that offers better pricing than other in-network pharmacies. In-network pharmacies will have lower prices than out-of-network pharmacies.

What is your out-of-pocket cost if you use the local pharmacy versus using mail order?

Are you comfortable using mail order?

Once these questions are answered, you should consider the plan’s annual deductible, the co-payments and co-insurance, its drug tiers, and any drug restrictions.

Cost sharing. Cost sharing may take the form of either a co-payment or co-insurance. A co-payment is a flat dollar amount; for example, $20 for a 90-day prescription. Co-insurance is a percentage of the cost; for example, 15% of the drug cost. A drug costing $200 with a co-insurance of 15% would cost you $30. If you are taking costly drugs you may be better off paying a co-payment rather than a co-insurance amount, so it’s important to see which form of payment a plan requires for your medications.

Drug tiers. Part D plans place prescription drugs in different cost-sharing tiers depending on the type of drug (brand name versus generic) and whether the drug is a “preferred brand” or a “preferred generic.” The cost of the drug depends on which tier the drug is placed.

Drug restrictions. Drug restrictions take many forms. For example, a plan might limit the quantity of a drug that may be dispensed for any one prescription. For certain medications, a plan may require patients to obtain prior authorization from the insurance company before their doctors prescribe a drug. Plans might also require step therapy for certain conditions, meaning the patient would need to take less expensive drugs to determine their effectiveness before being prescribed more expensive alternatives.

Concerns about health care in retirement go well beyond finances. It does not matter if the dollars being discussed are large or small. Health care is a very personal issue and we are happy to help you with making the best decision possible.